5 Charged With Insider Trading After Alcoholics Anonymous Confession

WASHINGTON (AP) — Federal regulators on Tuesday charged a Philadelphia investment broker and four others with illegally profiting on insider information that the broker learned from a friend he met at Alcoholics Anonymous.

The group allegedly made $1.8 million from the insider trading scheme, which stretched as far away as Hong Kong.

The Securities and Exchange Commission said Timothy J. McGee, a financial adviser at Ameriprise Financial Services, bought up shares of Philadelphia Consolidated Holding Corp. after learning the insurance company was about to be acquired. A Philadelphia Consolidated executive, whom McGee had known for a decade through AA, had confided that he was facing pressure at work related to the impending merger.

The SEC said the pair had grown close, trained for triathlons together, and McGee had assured the executive many times that he would keep any information they discussed confidential. The SEC said McGee instead bought up shares of the insurer and tipped off an Ameriprise colleague, Michael W. Zirinsky.

Zirinsky purchased shares worth hundreds of thousands of dollars through his own trading account, as well as those of his wife, sister, mother and grandmother, and his father also traded on the information, according to the SEC. Zirinsky then shared the tip with a Hong Kong-based friend, Paulo Lam, who passed it along to another friend. That man’s wife, Marianna sze wan Ho, then also purchased a large amount of Philadelphia Consolidated stock, regulators said.

The insurer’s shares surged 64 percent after Philadelphia Consolidated announced in July 2008 that it would be purchased by Japan’s Tokio Marine Holdings. The Zirinsky family made $562,673 selling their shares and McGee made $292,128, while Lam netted $837,975 and Ho’s take amounted to $110,580, the SEC said.

The civil complaint filed in the U.S. District Court for the Eastern District of Pennsylvania charges McGee, Michael Zirinsky, Robert Zirinsky, Lam and Ho with insider trading. The SEC is asking that they be ordered to relinquish the profits from their stock sales and pay penalties.

“McGee stole information shared with him in the utmost confidence, and as securities industry professionals he and Zirinsky clearly knew better,” said Elaine C. Greenberg, Associate Director of the SEC’s Philadelphia Regional Office. “As this case demonstrates, we will follow each link in a tipping chain all the way to Hong Kong if necessary.”

Lam and Ho have agreed to settle, with Lam paying the SEC $1.2 million and Ho paying $140,000. The SEC said neither Lam nor Ho admitted or denied the allegations as part of the deal.

The Financial Industry Regulatory Authority, a private group, aided in the case.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments

One Comment

  1. mb3542 says:

    I don’t see the big deal. Congress gets to insider trade with absolutely no consequences.

    1. beazr says:

      it’s illegal look it up. What they reported in the news was a lie.

      1. last chance gas says:

        Excuse me [I don’t mean it] but I was under da impression it was 432 (excluding Hons. Ron Paul, Justin Amish and Walter Johnson) and 99 (Rand Paul).
        We have to purge the entire government before Communism is completely installed. This started with George (the B@st@rd) Bush Sr.

      2. ExposingTheLies says:

        Especially if it’s linked to from the Drudge Report and featured on cbslocal. Much of the news is made up after the coup and cover up. Unelected officials took over Washington and the media. They think you can’t handle the truth. Fact of the matter is we have no democracy, president, and freedom of press is an illusion.

        Our next election is shaping up to be as big of a sham as the last. Do you know why Sarah Palin’s bus tour was really canceled? Do you know why she stayed 30 miles away from the second debate and chose the death of Steve Jobs to announce that she’s not running? Know what leaked out? Sarah Palin and Cain aren’t in the race for the same reason, the truth leaked out. Search PalinsDirtyLittleSecret for the biggest cover up in history

    2. inventory3 says:

      Where did it say in a meeting ? The article stated in a relationship…

  2. Michael Oberndorf says:

    Moral: Don’t whine at AA meetings.

    1. Jeff Rosenbury says:

      So millions of alcoholics suffer just to catch three white collar criminals? There is a reason ministerial and doctor confession exemptions exist.

      We don’t need the police infiltrating group therapy sessions looking for an easy bust.

      1. Jeff DeWitt says:

        It sounds like the insurance company exec (not named) shared something that was bothering him with McGee, and McGee had repeatedly assured him he would keep the information quite.

        So far that is right and proper, nothing wrong.

        But then McGee broke the trust.

        It doesn’t sound like the police did anything wrong, nor did the insurance exec.

  3. jane says:

    to bad they arent congress, this would be ok then.

  4. Dan says:

    an immoral alcoholic? Who wouldda thought?

    1. Kathy says:

      Alcoholism is a disease. You should be blessed and grateful you don’t have it.

      1. SG says:

        How does one contract alcoholism?

      2. Get_Real says:

        I love the victim mentality of America.

        Actually I don’t, it’s pathetic.

      3. Daisy says:

        “Alcoholism is a disease. You should be blessed and grateful you don’t have it.”

        Amen. Although alcoholics in recovery are overwhelmingly grateful for having a disease that brings them such deep spiritual recovery that they don’t need to hurl accusations of immorality at others or profess superior knowledge “How does one contract alcoholism?” regarding a subject about which they’re clearly ignorant. To answer SG: How does one contract cancer? Or a neurological illness?

      4. ella funt says:

        So, by having this DISEASE, you get fined, lose your driver’s license and possibly go to jail because you drive.

      5. Sammie Jo says:

        It’s not a disease it’s a CHOICE!
        If it was a disease it would require medication to get over, but it only requires saying no to the bottle.

      6. makemyday says:

        Well said – some people are complete morons!!!

      7. mjazz says:

        Actually Sammie Jo, you can die from alcohol withdrawal, and people do need medication to quit.

      8. StevensonNY says:

        @ Sammy Jo – Your ignorance is staggering, or maybe you are just misinformed. Why don’t you go go ask a physician what their opinion is on whether or not it is a disease or a choice. Alcoholism is widely accepted as a disease and physical addiction by the majority of the medical community.

      9. Steven says:

        Sammie Jo : The medication is meetings. Just like the medication for a diabetic is insulin.

      10. Billy Burrstone says:

        Acoholism and addiction are caused by pathways in the brain that are out of balance – brought on by excess dopamine receptors developed in the brain. This imbalance can develop in infancy, for various reasons. Or it can be brought on through substance abuse during adolescence. The resulting imbalance becomes manifest in adults who are subsequently “powerless” after their first drink. Alcoholism is not “caused” by a lack of character or willpower.

      11. sam says:

        is nicotinism a disease? Heroinism?

        I have Psoriasis, that is a disease. Cancer is a disease. addiction to alcohol is not a disease, it is a mental obsession and there is a difference. Otherwise any form of addiction can be considered a disease.

      12. Keith in Seattle says:

        Coming from an ex-alcoholic, no, it’s NOT a disease. It’s a choice you make every day to either drink or not to drink. Yes, it’s that easy. I found three common denominators in NA, CA, and AA. Weak minded people.

    2. Peter O says:

      Dan – stupid sarcastic remark. Idiot!

  5. Perry says:

    Moral to the story.

    Don’t trust Alcoholics with any information outside of your alcoholism. Why did these guys even mention the insider trading at an AA meeting?

    1. james pog says:

      Moral to the story

      People should actually read the story, before commenting on the story.

    2. kingfish says:

      Read the story first. Insider trading was not mentioned. Insider trading took place after information was learned.

  6. August says:

    How come the 12-Step religious cult’s “Higher Power” didn’t stop this; it is a REAL “Higher Power” isn’t it?

    1. J.D. says:

      You may want to do some research to understand what they call a higher power, it’s not necessarily a traditional God-like figure.

    2. Zelsdorf Ragshaft III says:

      August, you demonstrate what you know about 12 step programs with your ignorance. There is more good done at a 12 step meeting than you have done in your intire miserable life. We can only hope you do not suffer from your ignorance in all areas of your life.

      1. mimsy says:

        well for most of my INtire….or Entire life I sat in those cult-like meetings and saw alot of people die…..AA damn near killed me…..

        http://www.orangepapers.org

    3. makemyday says:

      It’s as **HIGH** as YOU want it to be!!!

  7. joe camel says:

    see what happens when you stop drinking and join a cult?

  8. guido says:

    the difference between a alcoholic and a drunk……A drunk doesn’t have to go to meetings…….

    1. ella funt says:

      An alcoholic HAS to drink.
      A drunk LOVES to drink.

      1. Sammie Jo says:

        Nobody HAS to drink, they drink because they want to.
        I had an alcoholic mother in law, father in law and ex husband, they wanted to drink.

    2. Vicky Bevis says:

      I can tell you’ve sat in a few meetings, guido. As the wife of a recovered alky for 29 yrs., the 4th. of this month, I can tell ALL on here that alcoholism is cunning, baffling & powerful, just for openers. I see so many on here who have little to no knowledge about the “disease” of alcoholism. And yes, it IS a disease. (Master’s Degree Nurse) They have isolated a gene; what turns it on IS alcohol. I was just discussing this with my GYN. earlier this wk. as her parents were both alkys.

      If drinking alone caued alcoholism, then why am I not one? I used to drink alongside my husband as we were living the “good” life that he worked so hard to have . ( Work-a-holics are frequently alkys.) He drank too much for too long, much like the history of alcoholism in his family. There’s no history of it in mine, so I’m not affected by alcohol like he is; in fact, I still drink when we go out to dinner & have for the last 29 yrs. A drink or 2 is all I have. If one is a TRUE alcoholic, 1 drink is too many & 1,000 is not enogh

      I’m genuinely surprised at how little knowledge about alcoholism gleened in the last quarter of a century is STILL not public/common knowledge. Alkys, like the rest of us, come in different packages. There is no “one size fits all” as far as getting “Clean & Sober.” Most take several tries to get sober for good & the few who do, are as grateful for sobriety as anything I’ve ever seen. Personally, I credit “Alanon” for keeping my sanity, avoiding a nervous breakdown & giving me a different way to live with or without people who are alkys. “Alateen” also did wonders, esp. for my oldest. He’s STILL in touch with a friend he met there. so many yrs. ago & went to visit her last summer.

      Investigate AA for what it offers-sobriety. It’s a “God helps those who help themselves” Kind of program & in the end, the alky MUST “get sick & tired of being sick & tired.” If not, then he hasn’t had enough to drink, which is why these Judges who “assign” DUIs to AA Meeting are so egregious. To put a person in a confidential group who doesn’t want to be there, is like playng with matcvhes.

      The AA “Big Book” is available in any library. Read it & LEARN.

      Wife of a grateful alky.

  9. CleanFun says:

    So much for the Anonymous part.

    1. makemyday says:

      @CleanFun – It is *Anonymous*…. But these “fools” didn’t follow the program!!

      @Sammie Jo – do your research BEFORE you write nonsense – as alcoholism is a recognized disease by the AMA!!!

      @guido – NOT a very smart comment…. Do YOU have a problem with alcohol??

  10. bobby says:

    Never………..and I mean never, STOP DRINKING!

    1. makemyday says:

      @Bobby…. Stupid comment from an obviously “stupid” person!!!

      1. w. nelson says:

        Well, I gotta get drunk

        And I sure do regret it

        But it’s just something I gotta do!

  11. Tshep says:

    Now go apply these same rules to all the corrupt politicians hanging out in congress…all 535 of them need to go NOW!

  12. George Johnson says:

    Congress can do this. The explicitly made the rules so THEY can do this. Why not these guys?

    1. The Bruce says:

      Because some animals are more equal than others.

  13. Pete says:

    Moral of the story = don’t trade based on inside info. It’s illegal!

  14. Chippy55 says:

    I don’t see how it is considered insider trading as the stock could have gone down after he purchased it. And, if it went down would this still be considered insider trading?

    1. a racic says:

      well said!!

  15. Anonymous says:

    After 24 years of attending AA meetings, I can assure you that these men did not sit in a meeting and discuss insider tradiing. They are probably referring to a conversation among AA members that took place outside of the meeting proper – either before or after the meeting. AA meetings revolve around the topic of alcoholism and recovery and AA has no opinion on outside issues, including politics, business and the stock market.

    1. hoppedup says:

      Not necessarily true. People admit all sorts of things at 12 step meetings.
      Did you not hear about the guy who admitted he set his house on fire and killed his kids on purpose because he was going through a divorce with their mother? A persona at the meeting (an online AA meeting) ratted him out.

      1. hoppedup says:

        oops… meant ‘person’ not ‘persona’.

      2. Anonymous says:

        There actually is no such thing as an “online AA meeting.” There are written disclaimers in AA discussion rooms saying that these are not real AA meetings. The format of these online meetings preclude members from sharing as they normally would in a meeting. Also, people don’t sit in the middle of an AA meeting and make confessions – they meet one on one with other members of the program to discuss personal issues outside of the actual meeting. People come in and are very sick and most people don’t recover. Only about 6% are still sober 10 years later, so the rooms of AA are filled with any number of messed up people, however there are those of us who do quite well. The people who stick around and work the program do beautifully..

  16. Big John says:

    It doesn’t sound like a 9th step confession. It sounds like a couple of guys at an AA meeting were just “talkin’ money talk”. And somebody made a move on it. This could’ve happened anywhere.

    1. Some people need AA says:

      Confessions are actually the 5th step… 9th is making amends for those wrongdoings… If you’re gonna talk about something you don’t know about, then google could make you sound less ignorant. Other than that, you’re probably right about the money talk.

  17. JD says:

    Beware of info you share with a “Sponser” in A.A. as well. There is NO confidentiality within A.A. like a doctor or attorney / client etc.

    1. Xenophanes says:

      Excellent point.

  18. Paul in FL says:

    If you have a drinking problem and can’t quit drinking by the age of 35 or 40 you shouldn’t – people who go cold turkey in middle age make a mess out of it.

    1. mjazz says:

      Beats drinking yourself to death

    2. Vicky Bevis says:

      Not true. I know people who drank socially for years ( usually a small amount to be social) But when they retired, it became uncontrollable. That’s why it’s cunning, bafflingly & powerful

      My husband got “Clean & Sober” at age 39 ( almost 40 ) pushing middle age.He has not had a slip, fortunately. He also did not have a rehab. visit. Everyone is different.

  19. mike says:

    There’s plenty of law enforcement to investigate AA meetings and bust fake NFL merchandise website, but not enough to deport illegal immigrants. Sad. We’ve had two awful presidents in a row now. I hope the next one gets America and the constitution. Job #1 is to protect the borders.

    1. makemyday says:

      Well…. If we ALL get behind Romney in November – then we can make that happen!! This “buffoon” Odummer has to go – before he does anymore damage to OUR country!!

  20. Michael Gene says:

    For politicians job 1 is staying in power no matter what.
    Insider trading should be seen for what it is rigging the game so the gambler always loses, we call it theft in Las Vegas. I also do believe the thieves in Washington should be prosecuted for investing in stocks after deciding to shower the company with our tax money or shorting the stock after deciding to hurt the company.

  21. The Bruce says:

    The nerve of these insider traders. Who do they think they are — members of Congress?

  22. JV says:

    Insider trading is like COUNTING CARDS. How could ANYONE in their right mind NOT do it? I mean you might as well say “OK you can buy and trade stocks OR even play cards but only blindfolded and wearing ear plugs! You just have to LIE GOOD I guess! So DAMN stupid! Hey shoot me, I remember the darn cards that were played. I’m so damn sorry sir.

  23. Mike says:

    “McGee obtained the information after an executive at the Philadelphia insurer, with whom he had a relationship with through Alcoholics Anonymous, complained about pressure he was facing due to the impending acquisition.”

    Kinda unclear as to where the comment as made. I had a comment I made in an AA meeting get back to a family member and cause all kinds of consternation. I never went back. Have maintained a rewarding sobriety, along with my atheism. Hint: well-glued folks don’t go to AA. Be careful.

    1. Vicky Bevis says:

      “Hint: well-glued folks don’t go to AA. Be careful.”

      Generally people in the thros of addiction aren’t too well-glued to begin with. But many use AA for recovery, for however long it takes them to feel normal being sober, & then they usually move on into life as a sober alky. I know one right now, sober 17 yrs., who goes to a meeting every day; he’s just substituting AA for his addiction. His private life shows he hasn’t gotten the “program.”

  24. RCK says:

    Apparently some of you need somebody to look down on. The addicted are good targets as are the mentaly ill. Makes you look good, because you sure need something to make you feel good.

  25. dj says:

    this has very little to do with AA, they could have been in a Starbucks. Just to guys, acquaintences talking. The businessman should have known to keep quiet, and McGee & Zirinsky NEW they were using insider information. Both are CROOKS. And as the comments about the US Congress, those brilliant members of Congress have exempted themselves from the SEC laws.That is how they got so rich during their terms in office.

  26. Kevin Stowell says:

    Ideological corruption, whether it is the result of chemicals (drugs, alchohol) or indoctrination (both of which tend to have a symbiotic relationship) are a communist’s dream.

    “Politicians are the same all over. They promise to build bridges even when there are no rivers.”

    “I once said, “We will bury you,” and I got into trouble with it. Of course we will not bury you with a shovel. Your own working class will bury you.”

    “Whether you like it or not, history is on our side. We will bury you!”

    Nikita Khrushchev

  27. Yirmin Snipe says:

    A disease is something you contract from a pathogen like a virus. Alcoholism is not a disease. You can only become an alcoholic if you decide to start drinking alcohol. No one is forced to drink alcohol it is a choice people make, often a very bad and stupid choice but a choice none the less… under your definition of disease, people that decide to blow their brains out with a gun were suffering from a “bullet to brain” disease.

    Don’t enable people that are stupid by calling their stupidity a disease.

    1. J says:

      Alcoholism is considered a “mental” disease because it is progressive and often fatal. Not all diseases are contracted from a pathogen. Many argue whether it is hereditary or action-driven – frankly, it doesn’t matter once the mental obsession has started. At that point, the alcoholic has the disease and will have it for the remainder of their life. Also at that point, the option of “choice” doesn’t exist – the alcoholic mind has no “off” switch once they consume the first drink. AA works and is the most effective tool against the mental obsession.

    2. Anonymous says:

      The American Medical Association (AMA) had declared that alcoholism was an illness in 1956. In 1991, The AMA further endorsed the dual classification of alcoholism by the International Classification of Diseases under both psychiatric and medical sections.

      Alcoholism is a chronic, life-long disease, such as diabetes. However, if managed properly, damage to the brain can be stopped and to some extent reversed. In addition to problem drinking, the disease is characterized by symptoms including an impaired control over alcohol, compulsive thoughts about alcohol, and distorted thinking.

      From Wikipedia page on Alcoholism as a disease.

  28. Ounceoflogic says:

    Insider trading happens thousands of times a day. It is only a problem – and only reported – when the “wrong” people profit from it (ie: people who are not bankers, lawyers, brokers, or congressmen/women).

  29. Burt says:

    that explains why investments are not statistically 50/50 (half of the people make money, other half loses).
    I’d say 90% loses…..most of the “winners” have insider’s info.

  30. Bill says:

    @Sammie Jo

    (Nobody HAS to drink, they drink because they want to.
    I had an alcoholic mother in law, father in law and ex husband, they wanted to drink.)

    I’m so sorry that you have been hurt by your family’s alcoholism. I don’t know how long its been sense you divorced your husband but it sound’s like it was really hard and painful. And you still sound really angry and hurt. You are right if the person in question is not ready (aka hitting rock bottom) then they will continue to drink. however just like other drugs it is an addiction and not always as simple as a choice. The fact that your in laws were alcoholics it make sense that your ex would be as well. Alcoholism is environmental and hereditary .That’s not to say all children of alcoholics will be alcoholics. I grew up in an abusive alcoholic home and i do not drink at all (i know its in the genes) I also had the benefit Of al-anon its not for every one. (in fact i didn’t stay with for long but long enough for me to learn to let go off the hate and anger i had) I’ve enclosed what i think is the national website for al-anon if it’s not i would hope you can find a local chapter its really nice to know your not alone in what your feeling. i hope this does not come off as smug or a holier than thou attitude its not meant to but i swear i can feel your hate, pain and anxiety. http://www.al-anon.alateen.org/

    1. mitch says:

      @Bill…you’re creepy

    2. Vicky Bevis says:

      Thanks for trying to help Sammie Jo, Bill I also had to “let go” & things slowly started turning around. What’s so ironic & why I’m so “high” ( on pun intended )on AA/Alanon is that it taught me a new way to handle life even w/o being an alcoholic. When something VERY BAD happened to me a few yrs. ago, I saw 1st. hand how dealing with terrible things using the philosophy of “the program” made a substantial change in me & allowed me to not waste my anger secreting cortisol to damage my heart. ( Anger promotes very bad substances to be released in the brain.)

      My very best to you Sammie Jo. I understand your anger, truly. while my inlaws aren’t/weren’t alkys, my mother-in-law is a poisonous dwarf & has a definable personality disorder, so dealing with her is an ightmare. Best of Luck!

  31. Gregg says:

    Congressional insider trading, yet another violation of our rights. The gov’t constantly violates our rights.

    They violate the 1st Amendment by caging protesters and banning books like “America Deceived II”.

    They violate the 4th and 5th Amendment by allowing TSA to grope you.

    They violate the entire Constitution by starting undeclared wars.

    Impeach Obama, support Ron Paul.

    Last link of “America Deceived II” before it is completely banned:

    http://www.amazon.com/America-Deceived-II-Possession-interrogation/dp/1450257437

  32. Deskboy says:

    At first I thought alcoholism was a choice, but now that I am older and hopefully wiser I see it as a disease, one that you are born with. You won;t know that you have it until you start drinking and lose control….
    If AA works, great. Counseling works for some for other diseases, AA is the only one that works for some people and they succeed…. day to day.

  33. Edward Boothe says:

    What is said in AA meetings is supposed to stay there, even though it wasn’t too bright of them to be talking about it

  34. JMWinPR says:

    if a pigeon ever needed a reason for having a sponsor, this is it.

  35. reitred says:

    We need to be discussing more serious issues.

    Free condoms for all

    Condoms prevent unwanted pregnancy and protect women’s health by preventing STDs.

    The Obama administration is guilty of sexual discrimination.

    Free condoms for all.

  36. Picking up Some says:

    They were just feeling bettter about quitting drinking, probably so they could do more tri’s, and now, back in the dumps, with Ethyl again.

  37. dave says:

    Hey….congress doesnt like regular people horning in on their insider trading opportunities!
    Thats why they made it illegal for everyone but them.

  38. Cmiller79 says:

    If these are the types of decisions this guy made sober, I hate to see what his bad decisions were that led him to rock bottom and AA.

    The Insurance exec should be guilty too. Just because he didn’t trade on the informaiton, as far as we know, doesn’t mean that he can speak publicly about impending major events of a public company.

  39. jesus_loves_you! says:

    What’s the big deal? Congressmen, Senators, and the banksters do this everyday. Obviously the AA traders didn’t have Bernie Madoff’s connections.

  40. Hanoman says:

    More insider information from AA…

    Don’t Drink. Clean Up Your Past. Help Others.

    How cult-like!

Leave a Reply

Fill in your details below or click an icon to log in:

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More From CBS DC

D.C. Lottery Live
Follow and Like Us

Listen Live